Empowering Young Entrepreneurs: Financial Literacy and Access as Strategic Imperatives

Financial Empowerment for Young Entrepreneurs: A Strategic Imperative

By Jo Gray, Director of Membership Services and Engagement, Youth Business International YBI

April 24, 2024

Youth Business International YBI in collaboration with ten enterprise support organizations from its global network of members has developed an evidence-based approach to systematically improve the financial health of young entrepreneurs by integrating financial access and literacy through three pathways for enterprises supporting them.

Entrepreneurship is a transformative avenue for young individuals seeking economic indepence, shaping economies, and driving businesses that create positive social impact. Young entrepreneurs are pivotal in future economic development and key drivers towards achieving Sustnable Development Goals SDGs. However, despite their ambitions, they often lack the requisite resources.

Insufficient access to finance remns a consistent barrier for young people aspiring to start or grow their business ventures, hindering their ability to generate income, create jobs, contribute to national economies. Young entrepreneurs are half as likely as their older counterparts to secure financial credit. Even in regions with robust infrastructures, such as Europe, only 33 of young aged between 15 and 30 entrepreneurs manage to obtn funding through traditional banking channels, according to a 2023 Flash Eurobarometer survey. This barrier is systemic, reflecting disparities in access and opportunity that disproportionately affect marginalized groups, including women and individuals with disabilities.

Financial products and services, when avlable, might not meet the specific needs of young people due to lack of flexibility regarding credit history, collateral requirements, or risk considerations. Moreover, young entrepreneurs often lack product awareness, banking backgrounds, sufficient savings, and collateral, and requisite business skills that enable access to finance effectively.

Building on our two decades of experience, YBI along with ten enterprise support organizations ESOs from its global network members have developed an evidence-informed approach med at improving the financial health of young entrepreneurs by integrating financial access alongside financial literacy. This initiative is based on identifying four elements essential for financially healthy young entrepreneurs:

1. Knowledgeable: Young people are aware of avlable products and services, capable of managing day-to-day finances to meet business requirements.

2. Resilient: Young individuals possess the capacity to withstand financial shocks.

3. Capable: Young people have developed skills and capacities needed for achieving their business goals.

4. Confident: Young entrepreneurs feel secure and confident in managing their business finances.

YBI, together with its members, recognizes that combining finance access with skill development can address young entrepreneurs' readiness as well as the avlability of financing, leading to more successful and scalable youth-led businesses.

Empowering the next generation through financial health is both a social and economic imperative. By addressing systemic barriers and unlocking potential in young minds, we lay the foundation for inclusive economic growth and sustnable development. Entrepreneurship must be viewed as a catalyst for change, unleashing the power of innovation to drive prosperity.

Explore YBI's paper 'Financial Health for Young Entrepreneurs – Our Learnings' for more insights into this approach.

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